A sharp improvement in New Zealand’s employment sector in the March – June quarter has boosted the New Zealand Dollar, sending the NZD/USD pair soaring.
According to data released some hours ago, the unemployment rate fell from 4.6% in the March quarter to 4.0% in the June quarter,
while the employment change grew from 0.6% to 1.0% in the June quarter. Both data sets surpassed market expectations (0.7% for employment change and 4.4% for the unemployment rate), sparking expectations that the Reserve Bank of New Zealand (RBNZ) could be set for an earlier-than-expected rate hike.
The RBNZ had, in a statement issued a few hours before the release of the employment data, warned that it would tighten standards for mortgage lending to cool off the housing market. Those being targeted are individuals with a high proportion of debt relative to their income, in a move that signifies that the RBNZ has begun to tighten the screws it loosened when the pandemic seized hold of the country.
The NZD/USD has soared 0.86% in Wednesday’s trading as a result of the news.
Technical Levels to Watch
After trading in a range bordered by the 0.70541 resistance and the 0.69068 support, the daily candle has violated the ceiling of this range aggressively. A 3% penetration close above the resistance confirms the breakout and opens the door towards a further push towards 0.71004 (6 July high). 0.71318 serves as an additional barrier to the north.
On the other hand, bears would only find joy if the ascending trendline support that intersects 0.69722 is broken. This move would allow for a decline towards 0.69431, with 0.69068 serving as the additional downside target.